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Showing 301 to 320 of 1571 Records
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2023 (7) TMI 1271
Correct head of income - Nature/characterization of income - gain on sale of shares - importance of the rule of consistency - analysis of period of holding - short term capital gains u/s.111A or business income - HELD THAT:- As in the immediately preceding assessment year and also in subsequent assessment year on similar high value transaction the AO has accepted the profits as short term capital gains.
As pertinent to mention to the observations of the Hon’ble High Court of Delhi in the case of Prem Kumar Chopra [2023 (5) TMI 1228 - DELHI HIGH COURT] wherein the Hon’ble High court has highlighted the importance of the rule of consistency that consistency does not mean putting iron fetters on the subsequent decision making; it only means expecting that a deviation from the previous decision in similar set of circumstances is explained by way of cogent and rational reasons.The appeal filed by the revenue is dismissed.
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2023 (7) TMI 1270
Disallowance of 50% of expenses excluding Travelling and Conveyance - assessee had not produced books of accounts along with original bills and vouchers for examination before the AO during the course of assessment proceedings - CIT(A) deleted the addition - HELD THAT:- AO has not made any allegation that amount have been spent for the purposes which are other than for meeting the objections of the trust or are not for charitable purpose. Considering the fact that the assessee has provided the details of the expenses on account of travelling and conveyance before the A.O., we find no error or infirmity in the order of the CIT(A) in deleting the addition - Decided against revenue.
Disallowance of depreciation - assessee is charitable or religious institution - during the appellate proceedings the assessee requested for withdrawal of the ground raised against the said issue - HELD THAT:- Since the issue regarding applicability of the amendment to Section 11 has been settled in DIT (Exemption) Vs. Indraprastha Cancer Society case [2014 (11) TMI 733 - DELHI HIGH COURT] and other connected Appeals, we find no error or infirmity in the order of the CIT(A). Merely because a ground has been deleted by the assessee and later on pressed the said ground by way of a submission, the authorities cannot deny the legal entitlement of allowability of depreciation to the assessee, which has been rightly granted to the Assessee by the CIT(A), accordingly, we find no merit in revenue ground.
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2023 (7) TMI 1269
Exemption u/s 11 - Accumulation of income - Carry forward of deficit - Carry forward of excess expenditure carried forward from the earlier assessment years - CIT(A) held excess expenditure in the earlier years is to be allowed to be carried over in the subsequent years - HELD THAT:- In case of CIT Vs. Market Committee, Karnal [2010 (7) TMI 1223 - PUNJAB AND HARYANA HIGH COURT] has held that the excess of expenditure incurred could also be adjusted against the income of the following years and requirement of Section 11 was only to apply the income which could also cover adjustment of the income for the expenditure for charitable purposes.
In view of the submissions made by both the parties and given the admitted position that the matter is squarely covered against the Revenue by the decision of Subros Educational Society [2018 (4) TMI 1622 - SC ORDER] as well as that of the Hon’ble Punjab and Haryana High Court in decisions referred supra, we affirm the findings of the ld CIT(A) allowing the carry forward of excess expenditure which has been carried forward from the earlier assessment years as well as for the year under consideration for set off in the subsequent assessment years.
Explanation 5 to Section 11 has been inserted by the Finance Act 2021 w.e.f 1/04/2022 which provides that “For the purpose of this sub-section, it is hereby clarified that the calculation of income required to be applied or accumulated during the previous year shall be made without any setoff or deduction or allowance of any excess application of any of the year preceding the previous year.” is made effective from 1/04/2022, thus, it won’t any bearing for the impugned assessment year 2015-16.
Appeal of the Revenue is dismissed.
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2023 (7) TMI 1268
Deduction u/s 80IB - not considering the miscellaneous income while calculating the eligible income for deduction - Additional evidences as submitted like copies of certain ledger accounts like slaughtering charges, account of gain of loss from forward contract, account of commission receipt, freight charges paid, account of JSB cargo and account of Refund from UP Sales Tax etc.not been admitted by the Ld. CIT(A) on the ground that the same is outside the purview of conditions stipulated u/s 46A of the Act
HELD THAT:- Considering all we are of the considered opinion that, the Ld. CIT(A) should have accepted the additional evidence and after verifying the documents produced by the assessee should have decided regarding eligibility or otherwise of the assessee regarding claim u/s 80IB therefore, we deem it fit to remand the matter to the file of the Ld. CIT(A) with direction to admit the additional documents produced by the assessee and decide the matter afresh.
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2023 (7) TMI 1267
Depreciation on ATMs - to be treated as computers or plant and machineries - @15% or 40% - HELD THAT:- As identical issue has been considered by the tribunal in assessee’s own case for assessment year 2017- 18 [2022 (8) TMI 1414 - ITAT CHENNAI] where the Tribunal by following its earlier order for assessment years 2015-16 & 2016-17, held that ATM machines are entitled for higher depreciation of 60% as against normal depreciation of 15% allowed by the Assessing Officer.
We direct the AO to allow higher depreciation of 40% as claimed by the assessee on ATM machine - Decided in favour of assessee.
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2023 (7) TMI 1266
Disallowance of provision on standard assets - Addition on the ground that it pertains to provision for standard assets and not for bad and doubtful debts and deduction u/s 36(1)(viia) can be allowed only in respect of provisions which are made for bad and doubtful debts, same is liable to be disallowed - HELD THAT:- We are of inclined to agree with the contentions put forth by assessee on this issue. In the case of ACIT Vs Jila Sahakari Kendriya Bank [2023 (5) TMI 68 - ITAT INODRE] ITAT held that provision for Standard Assets are allowable under Section 36(1)(viia).
The ITAT in the case of Nagaur Urban Co-operative Bank Ltd. [2013 (11) TMI 1696 - ITAT JODHPUR] also held that the “provision for standard assets” was held to be a provision for bad debts allowable u/s 36(1)(viia). Thus we too hold that the provision made by assessee qua standard assets is allowable u/s 36(1)(viia) of the Act.
Disallowance on account of member’s gift expenses - assessee had only made provision for gifts to members of the bank and hence it is not allowable as business expenditure - assessee did not furnish any documentary proof in support of the genuineness of the aforesaid expenses - HELD THAT:- Similar expenses have been allowed in the immediately preceding assessment year, in the interest of justice, the matter is being set aside to the file of Ld. CIT(Appeals) to check the veracity/genuineness of expenses incurred for gifts to its members and the assessee may also give supporting evidence in support of genuineness of the claim.
Golden/Diamond Jubilee expenses - Addition made as expenses as bogus and not incurred for the purpose of business - HELD THAT:- Department has made a specific allegation that the assessee has not been able to establish the genuineness of the expenses and the fact that these expenses had in fact been incurred at all. Ld. CIT(Appeals) in the appellate order has made a specific noting that statement of account is not supported by any records and evidences. Accordingly, in the interest of justice, the matter is being set aside to the file of Ld. CIT(Appeals) to check the veracity/genuineness of expenses incurred.
Disallowance u/s 14A r.w.r. 8D - assessee had earned a dividend income - HELD THAT:- In the case of South Indian Bank Ltd. [2021 (9) TMI 566 - SUPREME COURT] held that where interest free funds available with assessee banks exceeded their investments in tax-free securities; investments would be presumed to be made out of assessee's own funds and proportionate disallowance was not warranted u/s 14A on ground that separate accounts were not maintained by assessee for investments and other expenditure incurred for earning tax-free income.
In the case of UTI Bank Ltd. [2022 (10) TMI 613 - SC Orde] held that where interest free funds available with assessee exceeded their investments in tax-free securities, investments would be presumed to be made out of assessee's own funds and proportionate disallowance was not warranted u/s 14A.
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2023 (7) TMI 1265
Nature of receipt - Sales Tax subsidy - revenue or capital receipt - HELD THAT:- Tribunal in [2012 (9) TMI 281 - ITAT DELHI] and others have given a categorical finding that Sales Tax subsidy is of capital in nature, following the Special Bench decision in the case of Reliance Industries Ltd [2003 (10) TMI 255 - ITAT BOMBAY-J] which was subsequently affirmed by the Hon’ble High Court of Bombay [2009 (4) TMI 516 - BOMBAY HIGH COURT]. Thus Sales Tax subsidy is treated as capital receipt.
Recomputation of depreciation by reducing the capital subsidy from written down value of assets - CIT(A) was of the opinion that Sales Tax subsidy is solely meant to encourage setting up of industries in under-developed regions and merely because subsidy given was quantified according to investment made in fixed assets, it would not become payment for meeting cost of any or all the fixed assets. - HELD THAT:- Hon’ble Madras High Court in the case of Standard Fireworks Private Limited [2008 (6) TMI 344 - MADRAS HIGH COURT] held that where subsidy was given based on specified percentage of fixed capital cost, is not a payment directly or indirectly made to meet any portion of the actual cost and, therefore, such subsidy was not to be reduced from the actual cost u/s 43(1) of the Act.
This view was fortified by the decision of Eicher Tractors Ltd [2007 (5) TMI 688 - DELHI HIGH COURT]. We do not find any error or infirmity in the findings of the ld. CIT(A).
Disallowance of deduction u/s 10B - allocation of expenses - AO has computed the profits of EOU units on pro-rata basis in the ratio of sales turnover of EOU units and non-EOU units - HELD THAT:- We find that the entire quarrel revolves around the payment of Senior Management Salary, which has been allocated by the Assessing Officer in the ratio of turnover of EOU and non-EOU units as against appellant’s allocation of 5% of total expenses.
In A.Y 2006–07, AO was not convinced with the allocation and in the year under consideration i.e A.Y 2007–08, the assessee itself has allocated the Senior Management Salary cost in the ratio of sales of EOU units and non-EOU units. Therefore, the adverse inference of the AO in A.Y 2006–07 has been taken care of in A.Y 2007– 08. Thus no merit in the action of the Assessing Officer in reducing the claim of deduction u/s 10B of the Act. Therefore, we do not find any reason to interfere with the findings of the ld. CIT(A). Ground No. 1 is, accordingly, dismissed.
Depreciation on computer accessories - @60% OR 15% - HELD THAT:- CIT(A) was of the correct opinion that the ratio laid down in the case of BSES Rajdhani Ltd [2010 (8) TMI 58 - DELHI HIGH COURT] squarely apply wherein the Hon'ble High Court has held that peripherals, such as printers, scanners, server, formed, integral part of computer, and therefore, eligible for deduction of depreciation, @ 60%.
Addition on account of loan processing charges - CIT(A) deleted the addition - HELD THAT:- We find that the loan was utilized for business purpose is not in dispute. Merely because it was one-time payment made by assessee for loan processing charges would not make it a capital expenditure.
As decided in India cement case [1965 (12) TMI 22 - SUPREME COURT] loan obtained is not an asset or advantage of an enduring nature, expenditure was made for securing the use of money for a certain period and it is irrelevant to consider the object with which the loan was obtained. Consequently, in the circumstances of the case, the expenditure was revenue expenditure - Decided in favour of assessee.
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2023 (7) TMI 1264
Addition u/s 68 - Bogus share transactions - as per AO companies were operated by a single person and these were not in existence, but operated by some entry provider, who issued cheques in favour of the beneficiaries in lieu of cash - HELD THAT:- As transactions have been made through banking channel, entries are duly reflected in the bank accounts of both the parties. Share applicant companies have furnished complete Income tax details alongwith their respective bank statements and it is not the case of the AO that the assessee has purchased cheque by paying cash, nor there is any allegation or suspicion on the documentary evidences furnished by the assessee.
For discharging the initial onus cast by section 68 assessee has to establish (1) identity, (2) credit, worthiness and (3) genuineness of the transaction. Once the assessee proves all these three things, his onus is discharged. Facts on records show that the assessee has successfully discharged the initial onus cast upon it.
We do not find any merit in the additions made by the AO and do not find any reason to interfere with the findings of the ld. CIT(A). Decided in favour of assessee.
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2023 (7) TMI 1263
Unexplained cash credit u/s 68 - payment made by its debtors through the third party - HELD THAT:- It is the settled business practice that one has to recover the money from the party against sales. If the version of the department is accepted, then it is implied that no payment has been received by the assessee from M/s Shaikh Traders which is against the prevailing business norms. As such, the revenue before doubting the adjustment entry made by the assessee, should have brought something on record so as to justify that the sale was bogus, or the payment was received by the assessee in an unaccounted form or in the undisclosed bank account of the assessee or by any other mode. But no such detail has been brought on record by the revenue.
It is also pertinent to note that the AO in his remand report has clearly stated that receipt of money does not pertain to the year under consideration as it was received on 24th February 2012 financial year 2011-12 but the addition has wrongly been made in the year under consideration. Be that as it may be, it will not have any bearing on the given facts of the case. It is for the reason that the addition made by the AO which was subsequently confirmed by the CIT-A is not sustainable for the reasons elaborated above. Accordingly, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is hereby allowed.
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2023 (7) TMI 1262
Penalty u/s 271I - Penalty for failure to furnish information or furnishing inaccurate information u/s 195 - non-furnishing of Form 15CA - HELD THAT:- Apparently there was conflict between section 195 and rule 37BB regarding the compliance of Form 15CA, which was later on amended by the government by Notification No. G.S.R. 978(E) dated 16th December, 2015. Since, the remittances which were made, were against the import of goods and does not attract the provision of withholding tax and the requirement to furnish the details u/s 195(6) r.w. Rule 37BB is not mandatory.
Therefore, CIT(A) correctly held that there is lack of clarification of words expressively in the provisions, and only during this assessment year and no express specification have been made for penalty for each default.
The Income Tax Rules were amended w.e.f. from 16/12/215, in which the list of payments of specified nature mentioned in Rule 37BB, which do not require submission of Forms 15CA and 15CB, has been expanded from 28 to 33. The amendment though came into effect from 16th December 2015, but it is a settled law that if a statute is curative or merely declaratory of the previous law, retrospective operation is generally intended. CIT(A) held that the penalty provisions u/s 271I of the Act will not be applicable in the case and therefore CIT(A) deleted the same.
As gone through the above findings of ld CIT(A) and noted that there is no infirmity in the conclusion reached by ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. Decided in favour of assessee.
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2023 (7) TMI 1261
Assessment u/s 153A - unexplained credit into bank accounts - scope of unabated assessment - existence of incriminating material to initiate assessment - HELD THAT:- During the course of hearing here DR was specifically asked to refer and the produce the incriminating material qua this addition of unexplained credit into bank accounts. DR despite providing sufficient time of more than one month, he failed to produce or link the addition with the any incriminating material.
Neither the AO nor the ld. CIT(A) has specifically linked this addition with any incriminating material found and seized during the course of search, therefore, in absence of any incriminating material qua this addition, same cannot be sustained. The ground No. 2 of the appeal is accordingly allowed.
Unexplained cash credit on the basis of the revised balance sheet furnished by the assessee - HELD THAT:- This addition is not based on incriminating material found during the course of the search and accordingly same cannot be sustained relying on ratio in the case of Continental Warehousing Corporation [2015 (5) TMI 656 - BOMBAY HIGH COURT] - additions cannot be sustained on the legal ground of no incriminating material.
Unexplained cash credit - As submitted that additions which are in respect of same party for same deposit, but made once under credit in bank account and secondly under unexplained cash credit in books of account, same might be eliminated - HELD THAT:- We are of the opinion that addition could not be made twice for the same entry of the deposit, once, appearing in the bank statement and secondly appearing in the books of accounts of the assessee and similar is the situation in respect of cash deposit in bank account. The Assessing Officer shall verify the contention of the assessee and accordingly take appropriate action in accordance with law.
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2023 (7) TMI 1260
Revision u/s 263 - exemption of interest income earned by the assessee cooperative society from other co-operative banks or other banks - debatable issue - HELD THAT:- As relying on TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIMITED [2015 (2) TMI 995 - KARNATAKA HIGH COURT] interest income earned on fixed deposits with bank partake of the business income which is eligible for deduction u/s 80P(2)(a)(i) of the Act.
The above discussion clearly brings out the fact of existence of debate on the issue of taxability of the interest income earned on the deposits made with other co-operative banks or other banks. Therefore, in the light of the law settled by the Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] the power of revision cannot be exercised by the ld. PCIT in exercising of power vested with him u/s 263 in respect of debatable issue. Decided in favour of assessee.
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2023 (7) TMI 1259
Revision u/s 263 - Period of limitation of two years - HELD THAT:- When the claim of interest on income tax was not a subject matter of subsequent order passed by the Ld. AO u/s 143(3) r.w.s. 263 of the Act then the limitation period of two years as prescribed under subsection (2) of section 263 of the Act would reckon from the date of the first assessment and not from the second assessment.
Accordingly, we are of the considered view that the impugned revision order passed by the ld. Pr. CIT dated 24.02.2021 is beyond the period of limitation of two years provided under sub-section (2) of section 263 of the Act and consequently, the impugned order is not sustainable in law and liable to be quashed. Decided in favour of assessee.
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2023 (7) TMI 1258
Addition u/s 68 - Unexplained cash deposits - ingenuineness of the transactions noting that the three parties had issued cheques to the assessee for advances made from cash deposited in their accounts immediately before the cheques were issued - HELD THAT:- Cash deposits were attributed to loans taken from several farmers who were never verified to the AO - improbability of so many farmers giving loans to these persons was clearly made out by the AO pointing out that all these farmers are residing at a far away Taluka Gondal and had come to Rajkot apparently to open a bank account and to make these cash deposits only for advancing it to these persons.
Their bank accounts were also found to be opened in the same bank where these depositors had bank accounts. Even the person introducing the farmers was found to be the director of the assessee-company. The preponderance of probability of such circumstances clearly is that the genuineness of the advances was clearly not established as rightly held by the AO.
Advances made to the assessee were suspect and the assessee having failed to discharge its onus of clearing all these suspicions in any whatsoever - be it by producing parties for confirmation or the farmers for confirmation, the AO, we hold that, has rightly held that the cash deposits were unexplained. We, therefore, see no reason to interfere with the order of the learned CIT(A) confirming the addition - Decided against assessee.
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2023 (7) TMI 1257
TP adjustment - outstanding loan due from AE located in Dubai - TPO had taken interest rate @ 10.589% and charged interest on the loan amount - HELD THAT:- As in AY 2009-10 and 2010-11, the assessee did not make transfer pricing study. As noticed that the assessee had charged interest @ 5.14% and 5.08% respectively in those years, while the average LIBOR rate was 2.853742 and 1.284833 in those years respectively. It appears that no TP adjustment was made in those years. We are of the view that interest rate may be fixed at LIBOR + 300 basis points - we direct the AO/TPO to recompute the transfer pricing adjustment by adopting interest rate of average LIBOR + 300 basis points.
Disallowance u/s 14A - assessee had made investments AO disallowed 0.5% of the average value of investments, income from which does not form part of investments - HELD THAT:- As we notice that the details of quantum of exempt income were not given. It is well settled proposition that the amount of disallowance u/s 14A should not exceed exempt income. Accordingly, we restore this issue to the file of AO and direct him to restrict the disallowance to the quantum of exempt income.
Disallowance of Travelling expenses - expenses incurred towards purchase of foreign exchange - HELD THAT:- In our view, the assessee may be provided with one more opportunity to offer explanations. Accordingly, we restore this issue to the file of AO for examining it afresh.
Addition of interest income found in ITS data, but not reported by the assessee in the return of income - HELD THAT:- We notice that the assessee has accepted this addition before the AO. Hence we dismiss this ground of the assessee.
Addition u/s 41(1) of the Act towards remission of liability - huge sum was due from party for quite long time - HELD THAT:- We notice that the AO has not examined as to whether the above said amount was claimed as expenditure in any of the years, which is the paramount condition for invoking provisions of sec.41(1) of the Act. Accordingly, we are of the view that this issue requires fresh examination. Accordingly, we restore this issue to the file of AO. We also direct the assessee to furnish all the relevant details to AO.
Disallowance of set off of short term capital gain considering it as bogus/sham transactions - HELD THAT:- In our view, this issue also requires fresh examination. Accordingly, we restore this issue to the file of AO. We also direct the assessee to furnish all the relevant details to the AO.
Disallowance u/s 43B - reducing the same from closing Work in Progress - HELD THAT:- We notice that the interest was payable to Punjab and Maharashtra Co-operative Bank. The interest payable to a co-operative bank was brought within the ambit of sec.43B of the Act with effect from AY 2018-19. Accordingly, we direct the AO to delete this disallowance and consequently, the same is not required to be deducted from the value of Work in Progress.
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2023 (7) TMI 1256
Addition of income appearing in Form No. 26AS not found at ITBA portal - For financial for next year F.Y. 2017-18 wherein such receipts are shown/declared by the appellant - AO added lumpsum disallowance of 20% out of expenses so claimed - HELD THAT:- The appellant filed the documentary evidence/proof of said receipts duly shown in the F.Y. 2017-18 highlighting the relevant entries vide annexure 3 of the reply dated 07-11-2022. However the Ld. CIT(A) without providing any opportunity passed the order by simply mentioned that above said details were not found on ITBA portal though assessee AOP mentioned in its letter.
It is, thus evident that said income of stall rent was income of financial year 2017-18 (A.Y. 2018-19) and has been duly shown in return filed for A.Y. 2018-19 and, therefore its addition wrongly confirmed by Ld. CIT(A) in A.Y. 2017-18 is a double addition which is wrong and bad in law and the same deserves to be deleted.
Deduction u/s 80G - Donation given to CM Relief Fund - Deduction denied as proof of such donation was not found at the ITBA portal - HELD THAT:- A.O. did not required assessee in assessment proceedings to produce receipt of contribution made by Association in C.M. Relief Fund for which deduction u/s 80G was claimed in return filed. The said receipt is filed at page no. 22 of annexure 3 uploaded on ITBA portal on 07-11-2022. The said receipt is again enclosed herewith. It is therefore prayed that deduction u/s 80G may kindly be allowed.
Addition made based on 26AS - As based on the arguments of both the parties that the contentions raised before us found acceptable. The deduction of donation is required to be given as the ld. AO has not asked and the ld. CIT(A) has not given any adverse finding we direct the assessee to file the proof of donation made to the file of the ld. AO. The ld. AO is directed to verify the receipt of the donation and allow the claim of the assessee in accordance with the law. As regards the addition based on the receipt reported in the year under consideration the ld. AO is directed to verify that whether the same is recorded in the receipt shown by the assessee in the subsequent year and after verification the receipt which has been shown in the accounts of the subsequent year then the ld. AO is directed to deleted the amount which has already been offered in the subsequent year.
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2023 (7) TMI 1255
Reopening of assessment u/s 147 or assessment u/s 153C - Unexplained investment - assessee has purchased the property by paying ‘on money’ - addition on the basis of statement of one Shri Madan Mohan Gupta [scheme developer from whom assessee purchased a plot in residential project] - HELD THAT:- Since in this case there is no direct material related or pertained to the assessee but the information and disclosure based on the incriminating documents suggest that information came to the knowledge of the AO based on the incriminating documents revealed during the search. Therefore, we are of the view that in this case considering the peculiar circumstances, notice is correctly issued under section 148/147 of the IT Act and we are of the view that there is no direct evidence for issue of notice u/s. 153C of the Act in this case.
Transaction of “on money” - As regards the facts found from the seized material, it is evidently clear that the receipt of the cheque money is accepted by Shri Madan Mohan Gupta. Even the possession of the land is given by Shri Madan Mohan Gupta . The receipt of the money was also given by Shri Madan Mohan Gupta. Not only that, based on these incriminating documents Shri Madan Mohan Gupta accepted the transaction of “on money” and has offered the tax in his after search disclosure and return.
Therefore, no reason of accepting the contention of the assessee that he has not paid any ‘on money’ for purchase this property. As regards the opportunity for cross examination, the ld. A/R did not demonstrate before us any request made so far before the lower authorities and even the ld. CIT (A) has categorically dealt this aspect in his order and we do not find any infirmity in his finding also.
Therefore, assessee is expressly shown as purchaser of the plot based on the Receipt, possession letter and incriminating documents based on which even the seller has disclosed the ‘on money’ payment. There is no reason or any material based on which we accede to the request of the assessee that he has not paid any ‘on money’. Even the assessee has not filed any other document specifically controverting these finding of fact of the lower authorities and, therefore, no merit in the grounds taken by the assessee.
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2023 (7) TMI 1254
Reopening of assessment u/s 147 - unexplained cash credit which was not disclosed in the financial statement filed by the assessee - distinction between a belief and suspicion of escapement of income - HELD THAT:- In the present case, the mere information of cash deposit, we hold, could not by itself have lead to formation of belief of escapement of income. The decision in the case of Mariyam Ismail [2016 (8) TMI 1472 - ITAT AHMEDABAD] and Bir Bahadur Sijwal [2015 (2) TMI 60 - ITAT DELHI] being rendered in identical backdrop of facts holding cash deposits being insufficient information to lead to belief of escapement of income, the said decisions squarely apply to the present case.
As per the reasons recorded, the assessee had filed his return of income for Asst. Year 2010-11 and 2011-12. AO formed belief of escapement of income for the said two years. In his reason recorded, the AO has not even mentioned the income which the assessee had returned to tax in these years.
We fail to understand that without taking note of the quantum of income returned to tax, how could the AO have formed belief of escapement of income to the extent of cash found deposited in the bank account of the assessee. In the circumstances, the return of income disclosed sufficient income returned to tax so as to justify cash deposited in the bank account of the assessee, there could not have been any possibility of formation of belief of escapement of income.
Even as per the reasons recorded, the reopening was resorted to by the AO to verify source of cash deposited. It is settled law that reopening cannot be resorted to make fishing and roving inquiries and for verification purpose. For the above reasons, therefore, we hold that the reasons recorded for reopening of the case of the assessee were not sufficient to form belief of escapement of income and jurisdiction assumed by the AO, therefore, to frame assessment under section 147 of the Act was bad in law. The order passed, as a consequence, in all three appeals by the AO, is held to be invalidly passed and accordingly set aside.
Jurisdiction assumed by the AO to reopen the case of the assessee in all the years impugned before us, was invalid. Assessment orders passed for all the years are accordingly set aside. Decided in favour of assessee.
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2023 (7) TMI 1253
Income from House property - deemed rental income - treating the property of the assessee held as fixed assets, as being eligible for being subjected to tax under section 22 of the Act, on the deemed rental income earned thereon as per the provisions of said section - HELD THAT:- On going through order of the AO, we find that he has rightly interpreted the provision of section 22 and applied it to the facts of the present case. The AO has rightly referred to provision of section 22 as specifying that property consisting of any building or land appurtenant thereto of which the assessee is the owner, other than the property which he occupies for the purpose of any business or profession, to be chargeable to tax under the head income from house property.
AO has noted that all the properties, held as fixed assets by the assessee, who is in the business of real estate, are eligible for taxing their ALV as per section 22since the assessee is not carrying out any business from these properties. Assessee has been unable to controvert this finding of the authorities below. Therefore, the arguments of assessee that the properties held by it as fixed assets were for the purpose of business of the assessee, and their ALV was to be excluded for taxation under section 22 of the Act, is rejected as untenable in law.
Since the properties were vacant throughout the year, the assessee is entitled to vacancy allowance, and accordingly, the ALV of the property would therefore be NIL - AO, we find, has rejected this contention of the assessee noting that the sub-clause(c) of sub-section (1) of section 23 which deals with providing vacancy allowance allows the same only when the property is ‘actually let out’ and not based on the intention of letting out. The ld. counsel for the assessee was unable to controvert this finding of the AO.
No reason to interfere in the order of the ld.CIT(A) holding that the property held as fixed assets qualified for the ALV thereon being subjected to tax as income from house property as per the provisions of section 22 of the Act.
Whether interest paid by the assessee qualified for deduction against the ALV of the properties in terms of section 24 of the Act while computing the income from house property? - As assessee was unable to point out how it had been demonstrated to the CIT(A) that all interest expenses qualified for deduction under section 24 of the Act. In view of the above, we see no merit in the ground no.4 raised by the assessee in its CO seeking allowance of claim of interest expenses u/s 24 of the Act.
CIT(A), we have noted, has been fair enough, in allowing the assessee another opportunity to bring out the facts of its case, and claim allowance of interest expenditure after verifying of the facts by the AO and determining amount allowable as per law. In this view of the matter, ground no.4 of the CO is also dismissed.
Deemed rent on stock in trade - CIT(A) deleted the addition - HELD THAT:- CIT(A) deleted the addition following decision of the Hon’ble jurisdictional High Court in the case of Neha Builders [2006 (8) TMI 105 - GUJARAT HIGH COURT] holding that property held as stock-in-trade did not qualify for ALV thereto being subject to tax in terms of section 22 - DR was unable to distinguish the said case before us. Inview of the same, we see no reason to interfere in the order of the ld.CIT(A) deleting the addition made on account of deemed rental income amounting to Rs. 28,85,598/- on property held as stock-in-trade by the assessee.
Disallowance of interest u/s. 36(i)(iii) - CIT(A) noted that the assessee was in the business of real estate and had made investment in property only, which were classified as fixed assets or as stock-in-trade, thus directed allowance of the claim of interest against such properties, as per section 24 - HELD THAT:- Since the disallowance made by the AO was in relation to property held as fixed assets, and since these very same properties have been subjected to tax on account of deemed rental income under the head “income from house property”, CIT(A) has we hold rightly held that the assessee is entitled to claim interest expenses against the same, as per section 24 of the Act. DR was unable to point out any infirmity in the finding of the ld.CIT(A) in this regard, therefore, we see no reason to interfere in the order of the ld.CIT(A) deleting the disallowance made under section 36(1)(iii) of the Act.
Addition u/s 14A - Addition to book profit u/s. 115JB on account of disallowance u/s. 14A - CIT(A) deleted the addition - HELD THAT:- No infirmity in the order of the ld.CIT(A) vis-à-vis legal proposition followed by it while restricting the disallowance to the extent of exempt income earned. In view thereof, we see no reason to interfere in the order of the ld. CIT(A) restricting the disallowance of expenditure under section 14A
MAT addition - As we see no reason to interfere in the order of ld.CIT(A) deleting the adjustment made to the book profits of the assessee on account of expenses disallowed under section 14A of the Act as relying on TORRENT CABLE LTD. case [2017 (1) TMI 564 - ITAT AHMEDABAD].
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2023 (7) TMI 1252
Refund of Customs Duty - Principles of unjust enrichment - applicability to Public Sector Undertakings with regards to excess paid duties arising out of finalization of provisional assessment in terms of section 18 read with section 27 of the Customs Act 1962 - HELD THAT:- A solitary contention with regard to unjust enrichment was urged before the CESTAT. Following the authority in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [1996 (12) TMI 50 - SUPREME COURT] the CESTAT has rightly held that the Doctrine of unjust enrichment shall not be applicable in the case on hand as the claimant is a PSU.
Applicability of Doctrine of unjust enrichment is applicable to PSUs - HELD THAT:- No material is placed to show that the view taken in Mafatlal Industries has been reversed/modified. Both, Commissioner (Appeals) and the CESTAT have considered the principle of unjust enrichment and dismissed the appeals. Admittedly, Shipping Corporation is a PSU. Hence, there are no illegality or perversity in the view taken by both the Authorities.
This appeal must fail and it is accordingly dismissed.
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